This document compares the tax benefits of leasing an asset versus taking out a loan to purchase the asset over 2 years and 5 years. Over 2 years, leasing the asset results in a tax benefit of INR 36,144 compared to INR 11,710 for a loan, a savings of INR 24,434. Over 5 years, leasing results in a tax benefit of INR 36,144 compared to INR 13,638 for a loan, a savings of INR 22,506. In both cases, leasing provides greater tax savings than taking out a loan to purchase the asset.

1. Tax benefit working (Lease v/s 5 year Loan)
Particulars Amount
Cost 1,00,000
Lease rentals p.m. 5,020
Tenure 24 months
Total lease rentals in 24
months
1,20,480
Tax rate 30%
Tax benefit 36,144
Particulars Amount
Cost 1,00,000
Debt (80%) 80,000
Interest rate 13%
Tenure 60 months
Total interest in 24 months 17,709
Depreciation 15% p.a.
Depreciation for 2 years 27,750
TOTAL OF INT+DEPRECIATION 45,459
Tax rate 30%
Tax benefit 13,638
Net savings in cash outflow in operating lease = INR 22,506 (which is 22.5% of cost of
the asset which is more than 20% of security deposit taken from ORIGA
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2. Tax benefit working (Lease v/s 2 year Loan)
Particulars Amount
Cost 1,00,000
Lease rentals p.m. 5,020
Tenure 24 months
Total lease rentals in 24
months
1,20,480
Tax rate 30%
Tax benefit 36,144
Particulars Amount
Cost 1,00,000
Debt (80%) 80,000
Interest rate 13%
Tenure 24 months
Total interest in 24 months 11,280
Depreciation 15% p.a.
Depreciation for 2 years 27,750
TOTAL OF INT+DEPRECIATION 39,030
Tax rate 30%
Tax benefit 11,710
Net savings in cash outflow in operating lease = INR 24,434 (which is 24.4% of cost of
the asset which is more than 20% of security deposit taken from ORIGA
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